Rocketplace, a startup that aims to build a “next-generation asset management platform for crypto,” has raised $9 million in a seed funding round.
A few things about this increase stood out. On the one hand, the funding comes at an interesting time in the crypto world – during the so-called “crypto winter” and a period where other big players in the space like Voyager and Celsius are going bankrupt and others like Robin Hood and Coinbase carry out massive layoffs. second, Rocketplace — which offers commission-free trading of more than 30 tokens — claims it’s “not just another crypto exchange.”
It wants to go a step further by making fund allocation and management the centerpiece of its offerings. This is based on the belief that there will be an “explosion” of new digital financial products offered in the crypto space, and that all of these products will need distribution.
In the meantime, CEO Louis Berrill points out, clients will need appropriate disclosure and compliance, especially as regulations in the industry increase.
Also noteworthy is the experience of the founding team.
Beryl and Ben Hutchinson (COO) co-founded online lender Earnest. This firm sold to Navient in 2017 for about $155 million. Beryl was also a partner at both a16z and Y Combinator, and also founded Solid Energy Systems, which became public domain through a SPAC merger on the NYSE earlier this year.
Launchpad Capital led Rocketplace’s seed round, which also included participation from TTV, Partner, Menlo Ventures and Soma Capital. Accomplice led its pre-seed round, which totaled $8 million in two tranches and included checks from Launchpad and Better Tomorrow Ventures.
“If you think about it, in traditional finance, Fidelity’s business model, there are two big areas – retail and institutional,” explained Beryl. “Within retail, you have client accounts that enable the buying and selling of stocks and bonds. But on the other side of the business, you have fund allocation. Fidelity began creating its own funds as well as partnering with funds created by competitors.”
The brokerage then built a business around fund custody and administration.
“We’re building a similar business, with a similar ethos,” added Beryl. “And we’re building it on top of an extremely low-cost, high-quality, self-service digital asset platform.”
Since Rocketplace does not charge commissions, he can buy according to his volume. It makes money through a small spread between the price a buyer is willing to pay (bid) and the price a seller is willing to sell (bid).
But Beryl argues that the startup’s biggest difference is in its funding allocation model.
“Wwhat I believe will happen in the crypto space, which is very similar to what we’ve seen happen in traditional finance, is you’ll start to see this proliferation of financial products that investors can invest in – imagine an index in you know, like Vanguard created,” he told TechCrunch. “So these types of products come in all shapes and sizes, sometimes they’re bullish, sometimes they’re bearish… I believe we’re going to start seeing a huge proliferation of these in the crypto asset class.”
So what Rocketplace is building, Beryl added, is the distribution of these products, “so that retail investors can evaluate these products, invest in these products, get the appropriate data and tax information for these products and actually, very importantly, to obtain the appropriate regulatory and compliance and disclosure framework for these products. None of that exists today.”
He points to the Voyager and Celsius bankruptcies as evidence of the need for more transparency around performance and more “appropriate” disclosures.
Image Credits: Rocketplace
Rocketplace currently has 10 employees and plans to use its new capital in part to double its team over the next six months. Most of the capital will go to start up the fund distribution business.
Ryan Gilbert, founder of Launchpad Capital, said his firm was “thrilled to partner” again with Beryl and Hutchinson. (Gilbert also backed the couple’s previous venture, Earnest, while at another venture capital firm, Propel).
“Fund allocation and fund management are central to Rocketplace’s offering, and the timing couldn’t be better,” he told TechCrunch via email. “We expect an explosion of new digital financial products in the crypto space, and these products need compliant, well-managed distribution.
Gardiner Garrard, co-founder and managing partner at Atlanta-based TTV Capital, said his firm is “clearly aware that crypto is a major part of the financial future” and was drawn to Rocketplace’s mission to make crypto “more accessible to everyone.” .
“A key part of Rocketplace’s vision is the human side of cryptocurrency — making the asset class more accessible, intelligent and transparent,” Garrard told TechCrunch. “While most crypto platforms are designed to be transactional in nature, Rocketplace is built to offer an end-to-end, user-first experience. The Rocketplace team has the opportunity to build a lasting brand similar to Fidelity or Charles Schwab in traditional financial services.”